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Stanbic Bank secures US$8.68m from AGF to support SMEs across the country

KENYA – Kenyan Small and Micro Enterprises (SMEs) are set to benefit from an KSh1 billion (US$8.68m) loan portfolio guarantee facility issued to Stanbic Bank Kenya by the African Guarantee Fund (AGF).

The facility which targets women-owned businesses, as well as those in the sustainable energy sector is expected to impact thousands of SMEs across the country in the next 5years.

In addition to the financial offering, the guarantee fund will offer technical capacity building to these SME groups.

“Many Kenyan SMEs struggle to access financing due to their perceived higher risk, which has further deteriorated during the COVID-19 pandemic,” Franck Adjagba, the group director of business development, African Guarantee Fund said in a statement.

“Reducing this risk will help these businesses access the financing required for growth. We are pleased to partner with Stanbic Bank as it expands its lending to SMEs including Women-led and climate-focused SMEs.” 

Adjagba further noted that the SMEs will access loans from the bank as the purpose of this partnership is to share the risk that the bank will take by lending.

“Stanbic Bank remains committed to solving the holistic needs of our SME client segment and partnering for sustainable growth,” said Florence Wanja, the head of business and commercial clients at Stanbic Bank.

“SMEs contribute more than 30 percent of Kenya’s Gross Domestic Product, and close to 50 percent of new jobs created annually. Our partnership with the African Guarantee Fund is a significant milestone in contributing to accelerating their growth.”

Wanja also noted that the bank’s partnership with the AGF is in line with their It Can Be brand promise which seeks to empower individuals and help them achieve their goals

“This guarantee will enable us to extend credit to higher risk SMEs as they will be able to apply a visa mitigation instrument based on the agreement we have signed,” Wanja stated.

“Guarantee facility only provides the liquidity lending at the normal banking rates so that in case the SMEs default, the guarantee fund will support the bank from there.”

AGF was established to address this mismatch in the supply and demand of SME financing. A joint venture between the African Development Bank, the Danish and Spanish Governments, AGF was initiated in 2010 to partner with financial institutions to help them increase their exposure to SMEs in Africa.

Stanbic bank’s investments in financial inclusion are underpinned by the bank’s purpose of driving the country’s economic growth and are further aligned to Social, Economic and Environmental (SEE) impact areas. In doing so, the bank has successfully rolled out several initiatives to empower SMEs on various fronts.

By supporting businesses during a challenging operating environment brought on by the COVID-19 pandemic, Stanbic was among the first banks to restructure loans and issue moratoriums to 7,203 clients.

In addition, Stanbic Bank has collaborated with the Ministry of Industrialization and Enterprise Development to launch the FutureNiDigital campaign that has successfully equipped 50,807 businesses and individuals with digital skills.

The bank has similarly supported and empowered women consistently through the DADA proposition, which provides women with financial and non-financial support.

In addition, Stanbic Bank partnered with the United States African Development Foundation (USADF) to provide small businesses with access to markets and affordable financing while exposing them to digital technologies.

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